The Greying of Obama

People are starting to notice that President Obama is going grey. Supposedly, this started during the campaign and is noticeable now that he is President. We will never know if we would have gone grey regardless of his career choice, but we can be certain he is subject to considerable lifestyle stress.

In a post titled Obama's Ball and Chain, Thomas Friedman fears "that his whole first term could be eaten by Citigroup, A.I.G., Bank of America, Merrill Lynch, and the whole housing/subprime credit bubble." David Brooks in A Moderate Manifesto finds in the Obama budget "a promiscuous unwillingness to set priorities and accept trade-offs."

Nobel prize winning economist Paul Krugman, usually sympathetic to the left, writes in The Big Dither of "a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern." Stanford economist Michael Boskin, in a piece called Obama's Radicalism Is Killing the Dow for the right-leaning Wall Street Journal, charges "that our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis." Congressional Republicans say the same thing in tweet-sized bites, accusing the President of leading us to socialism or a European-style welfare state. And then there is the comedian Rush Limbaugh, whose radio audience has climbed from 14 million to 25 million in one week.

Commenting on the budget, the conservative British journal The Economist writes in Wishful, and dangerous, thinking that "the president has not explained to Americans that if they want bigger government, they will have to pay for it." Basically, they argue that the numbers don't add up when you increase government spending year after year while lowering taxes on 98% of taxpayers and increasing the tax burden on 2% who are not as rich as they used to be.

A response comes in the Brook's piece titled When Obamatons Respond. Senior administration officials say

1. "They’re not engaged in an ideological project to overturn the Reagan Revolution."
2. "The Obama administration will not usher in an era of big government."
3. "It is going to reduce this spending to 3.1 percent [of GDP] by 2019, lower than at any time in any recent Republican administration."
4. "The Medicare reform represents a big cut in entitlement spending. Health care reform will be deficit-neutral."
5. Deficits are now at a gargantuan 12 percent of G.D.P., but the White House aims to bring this down to 3.5 percent in 2012."
6. "Obama folks feel they spend as much time resisting liberal ideas as enacting them."

In other words, the administration feels its budget is misunderstood and it probably is. On the other hand, any attempts to make statements about the future (aka predictions) must be based on economic models which have assumptions, and the validity of the assumptions is always in question. (The use of mathematical models with invalid assumptions is cited as a primary cause of the financial crisis, so far a mortgage-backed securities are concerned.)

Obama has reason to go grey. Fixing the banks is something that has eluded both Treasury Secretaries Paulson and Geithner. The mess called AIG continues to act as a cancer upon the global economy. Joe Nocera's piece on AIG in the NYT called Propping Up a House of Cards reveals the greatest financial scam in the history of the world, one for which it is unlikely that anyone will go to jail, as everyone knew what was going on and everything was legal. People just didn't anticipate or care about the consequences, as so much money was being socked away.

Yes, Obama has reason to go grey.